Tag Archives: loans

What Are No Income Proof Secured Loans?

Loan on the monitor of a macbookIn today’s modern world of entrepreneurship, more and more people are finding satisfaction in operating their own businesses as opposed to seeking employment. Such self-employed individuals often require an extra source of income for financing the day-to-day operations of their business. This often prompts them to seek financial loans from lenders.

However, accessing loans is not always a walk in the park, as most financial institutions require proof of income to substantiate your claim for a loan. This is where no income proof secured loans come in handy.

What is a secured loan?

A secured loan denotes a contract in which a borrower commits a collateral like their car or home to acquire immediate cash. For instance, if you name your car as collateral, you will agree that the lender may gain legal ownership of your vehicle if you fail to repay the loan fully.

How do secured loans work?

If you are looking to borrow a secured loan, the lender will require you to have collateral that has greater value than the loan amount. For example, you might be able to get a loan of $1,000 if you offer your car that is valued at $2,000 as collateral. If you default in payment, your lender could always sell your car and make a profit from the deal.

Since no borrower desires to lose their collateral, they are always willing to work hard towards repaying their loans. Lenders charge lower interest rates because they know that the borrowers have huge incentives to repay what they owe them. Secured loans in Ogden, including title loans, therefore, are often easier on your pocket. The interest rate for these kinds of loans is partly dependent on your ability to pay on time and the value of the collateral you commit to this purpose.

It is no secret that the majority of conventional lenders grant loans based on your income. Most business entrepreneurs lack sufficient proof of income, which renders it a daunting task to access loans. Luckily, you can rely on secured loans that typically don’t require you to have proof of income, allowing you to solve urgent money issues conveniently.

How the Self-Employed Can Be Mortgage Ready

Home Exterior of House with LandscapingYou do not have to shy away from the idea of owning a house. Here are simple ways you can qualify for a mortgage to get your dream home.

Be mindful of your credit score.

Having a high credit score will increase your chances of qualifying for a mortgage and will get you a better loan deal. You can increase or maintain a good credit score by doing the following:

  • pay your bills on time
  • minimize your purchases on credit
  • avoid opening new credit accounts a year before you apply for a mortgage

A reasonably feasible way of maintaining a good credit score is to keep your credit balance below 30% of your credit limit. You can also hire professionals for a credit repair. The National Homeowners Foundation (NHF) states that 60% of credit reports contain inaccurate information. Getting credit repair services will help you remove inaccurate information and negative marks from your credit report.

Do a lot of research on available loans.

There are loans, such as Federal Housing Administration (FHA) loans, that are available for those with imperfect credit. This is perfect for the self-employed who had rocky periods after leaving their employer or setting up their business.

With a credit score of at least 580, you can get an FHA loan, and your down payment for your home can be as low as 3.5%. Meanwhile, if your credit score is somewhere between 500 and 579, your down payment will be 10% of the house’s amount.

Try to reduce your claims for a tax deduction.

Tax deductions are beneficial for the self-employed but can hurt your case when applying for a mortgage.

When lenders look at your W-2 forms, they consider that your real income is your gross wage, minus the expenses you listed on your Form 2106. The resulting amount will be one of the bases to qualify you for a mortgage. So if you’re planning on applying for a mortgage in two years, try to reduce your 2106 expenses.

With a little bit of juggling, you can apply for a mortgage in a few months or years. You’ve already worked up the courage and discipline to work for yourself; you can certainly find the means to qualify for the mortgage. 

Bad Borrowing Habits that Lead to Debt

DebtDebt problems do not occur because of a single borrowing or a missed payment schedule. Commonly, they happen because of habits that build up over time. Therefore, it is important to identify and prevent the bad habits related to borrowing. Here are five of them.

Taking Out a Debt to Pay for Another Debt

When you take out another debt to recompense for a previous liability, you only double the amount that you have to pay. Transferring balances between accounts may only worsen your problem with debt. Interest rates and other fees involved with borrowing may increase without your knowledge.

Borrowing Beyond Your Means

The convenience brought by loaning makes people eager sometimes. When applying for a loan, make sure that you can pay the amount in the future. According to Rapid Loans, the ideal way to estimate a credit is by calculating your regular income and monthly expenses – the total should meet the amount you have on loan. 

Using Credit for Everyday Purchases

When you use your credit card for daily expenses such as food, water, and gas, you might just be leading yourself to humongous debt. Credit cards are appealing because you can pay them in the future, but remember that they charge interest rates, too. This habit can increase your balances and ruin your credit score. 

Owning Multiple Credit Cards

Having three or more credit cards may be a disaster for those that do not know how to manage their finances properly. Owning too many credit cards is risky because it allows a person to increase his monthly financial liabilities. A person that cannot pay his credit card balances on time may only damage a good credit score.

Making Late Loan Payments

Most lending companies charge a penalty every time a borrower misses a payment schedule. Usually, these penalties are extremely high and may reach up to ten percent. Other than penalties, late loan payments may also increase the interest rate on your loan.

Borrowing money is okay, but remember that there are responsibilities attached to it. Before taking out a loan, make sure that you can pay it on time so you can prevent humongous debts in the future.